A Business Model Failure Is Not A Moral Issue

from the sorry dept

We already wrote about David Lowery's rant against a young girl for not paying enough for her music, noting that his whole focus seemed to be on pining for some mythical past that never existed, rather than dealing with market realities. Some folks have suggested that we "ignored" the moral arguments he was making, which Lowery's supporters insist are "resonating" with people. Even the NY Times and the LA Times both have discussed it, among many others. The NY Times' Ben Sisario gets it right, noting that "history has shown that heavy-handed moral arguments about music — or any other form of online entertainment, for that matter — are seldom effective." The LA Times' August Brown, however, seems to skip over all the factual errors, misleading statements and just outright laughers to suggest that the post is worthwhile (playing to the hometown Hollywood crowd, it seems).

Lots of others have weighted in as well, including musicians like Erin McKeown, who notes that "artists must generate their own solutions", and another Emily White (who happens to have founded some record labels), and says that the other White's post was dead on and she's ashamed that the music industry is so far behind giving consumers what they want.

Then there's long-term music industry guy, Wesley Verhoeve who makes a number of good points in his writeup, including the key one on the moral question, which was why we didn't bother to dig into it originally:

This is not about morals. This is about smarts. It’s not about being right or wrong. It’s not about rebelling. It’s about a giant shift in consumer behavior and how we as an industry deal with that.

The moral claim is a silly one. It's a distraction that sounds good but is meaningless. The issue here has nothing to do with morals. And that's especially true if you read the details of Emily's original post on NPR, in which she notes that she doesn't do "file sharing" per se, but gets her music from a variety of sources, including friends and platforms like Spotify. Lowery's real argument isn't about "piracy", it's about a failed business model -- because he's even pushing this ethical guilt trip on legal offerings like Spotify, because (according to him) they don't pay enough.

When you look at the details, you realize that Lowery isn't making a true moral claim. He's claiming that any business model, whether its legitimate or not, that allows musicians to not make enough money is, inherently, immoral. But that's ridiculous. If that's the case, then the old record label model is even more immoral, in that it paid next to nothing to tons of artists and then got to keep their entire copyright. Lowery's math is laughable. He talks about advances, but leaves out that those "advances" are then used to pay for everything, leaving almost nothing for the actual artists.

This is about failed business models, not morals. If you have a bad business model, you fail. End of story. If you have good content, an ability to connect with fans, and a good business model, you'll absolutely succeed today. We see it over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over again. And those were just the stories I could remember off the top of my head. There are tons more.

Point being: there are a ton of people who have realized that they're much better off under the new system. There are some people, like Lowery, who feel they're worse off. At that point, you have to realize it's not a moral issue, it's a business model or a market issue. If it were purely a moral issue, there wouldn't be so many stories about successes in the new world, because that would be impossible. All of those artists would be suffering. But the fact that so many are finding success shows that it's really about the choices being made by the artists themselves. Do they embrace what the consumers want -- which was all that Emily was really pointing out in her piece -- or do they scold them and demand that they support them in the old way?

It's got nothing to do with morals, because there isn't a moral question here. There are tons of business models that work today and work amazingly well. I am sure -- because he's brought it up before -- that Lowery or his friends will point to some Bureau of Labor stats claims about the number of full-time musicians declining. That is, at best, misleading. Remember, in the same period, the major record labels themselves have become even more focused on putting all of their effort behind one or two superstars. It's that old system that has resulted in a focus on a very very small number of professional musicians. If you look at independent artists they're growing rapidly.

And, if you know anything about the pace of innovation, you know that it takes those who are focused on the old system quite some time to catch up. So it's no surprise that plenty of musicians of Lowery's era simply refuse to really embrace what's available (and, no, pointing out that you have songs on iTunes is not the answer -- though I find it amusing that Lowery scolds White for not using iTunes when he, himself, once claimed that iTunes adds no value and is nothing but a parasitic "host").

About six years ago, we wrote about why there is no moral question to answer, because if the economics says that everyone can be better off -- i.e., musicians can earn more money and consumers can get what they want -- then there is no moral quandary or conflict. But, of course, there are some people who are "worse off": Lowery and his friends. But the question is whether that is due to the choices of the people he scolds -- the fans -- or through his own failure to put in place a business model that works.

Companies fail all the time. Lowery uses the emotional stories of two musicians who took their own lives to add additional weight to his moral argument. But, up here in Silicon Valley, you can't throw a stone without hitting a failed entrepreneur. And sometimes they, too, take their lives. It's very sad. Having your business fail on you is no fun at all. I know, I've been there. But it's not a moral issue. No one had a moral requirement to give me money when the startup I worked on in the 90s flopped. It was gut-wrenching, and massively depressing. But I had to move on and do something different -- something that had a market that was willing to pay. I figured that out. That's the same thing that many musicians are going through today. They are facing tough challenges, not unlike entrepreneurs. Many fail, some succeed. We recognize that as capitalism. But, for whatever reason, many of those failing today seem to want to turn it into a moral issue.

It may pull heart strings, but it won't solve the business model issue.